The pathophysiology of cutaneous lupus erythematosus (CLE) encompasses the complex interactions between genetics, the environment, and cells and their products. Recent data have provided enhanced understanding of these interactions and the mechanism by which they cause disease. A number of candidate genes have been identified which increase the risk of developing CLE. Ultraviolet radiation, the predominant environmental exposure associated with CLE, appears to initiate CLE lesion formation by inducing apoptosis, precipitating autoantigen presentation, and promoting cellular production of specific cytokines. Autoantibodies are a well-known entity in CLE, but their exact role remains unclear. Finally, cells ranging from native skin cells to innate and adaptive immune cells produce cytokines and other molecules and play specific roles in lesion formation and perpetuation. Native skin cells implicated in CLE include keratinocytes and endothelial cells. Innate immune cells crucial to CLE pathophysiology include dendritic cells and neutrophils. The primary adaptive immune cells thought to be involved include Th1 cells, Th17 cells, cytotoxic T cells, and invariant natural killer T cells. Though the pathophysiology of CLE has yet to be fully characterized, current research provides direction for future research and therapies.